A.P. Møller - Maersk A/S

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A.P. Møller - Maersk A/S

Esplanaden 50
DK-1098 Copenhagen K
Telephone: (+45) 3363-3363
Fax: (+45) 3363-3501
Web site: http://www.apmoller.com

Public Company
Incorporated: 1904 as Aktieselskabet Dampskibsselskabet Svendborg
Employees: 60,000
Sales: $21.38 billion (2002)
Stock Exchanges: Copenhagen
Ticker Symbol: MAERSKA
NAIC: 483111 Deep Sea Freight Transportation; 481111 Scheduled Passenger Air Transportation; 484110 General Freight Trucking, Local; 484121 General Freight Trucking, Long-Distance, Truckload; 551112 Offices of Other Holding Companies

A.P. Møller - Maersk A/S (A.P. Miller), known throughout the world for its Maersk shipping line, is a diversified conglomerate operating in the shipping, oil and gas, shipbuilding, retail, IT, and other industries. The companys Maersk Sealand shipping operation is the worlds leading container shipper, with 250 vessels in its fleet and a deadweight capacity of more than 12 million tons. Maersk Tankers is one of the worlds largest tanker operators, with a fleet of 100 vessels and deadweight capacity of more than 17 million tons. The company also operates a fleet of 45 semi-refrigerated and five fully refrigerated gas carriers under subsidiary Maersk Gas Carriers. The companys Shipping division also offers brokering, logistics, and supply services, and includes South African subsidiary Safmarine, Dutch-Swedish subsidiary Svitzer Wijsmuller, and cargo logistics and ferry operator Norfolkline. In its Oil and Gas division, A.P. Møller controls the concession for the exploration and production of oil and gas in Denmark, in partnership with Shell and Texaco. Together, Møllers Shipping and Oil and Gasbrought together in a complicated ownership structure under two publicly listed companies, Aktieselskabet Dampskibsselskabet Svendborg and Dampskibsselskabet af 1912, Aktieselskabcontributed more than DKr 89 billion ($10 billion) of A.P. Møllers approximately DKr 144 billion ($18.9 billion) in sales. The remainder is provided through four additional divisions: Industrial, Retail, Air Transport, and IT. Industrial includes Odensk Steel Shipyard, one of the worlds leading shipbuilders; Maersk Container In-dustri, a manufacturer of containers; A/S Roulunds Fabriker Group, a manufacturer of components, such as belts and hoses, for the automotive industry; Maersk Medical, a leading global manufacturer of sterile, single-use medical equipment and supplies. Under Retail, A.P. Møller is Denmarks second largest supermarket operator, through subsidiary Dansk Supermarked A/S, which operates under the Fotex, Netto, Bilko, A-Z, Toj og Sko, and Bugatti retail names in Denmark, England, Germany, Poland, and Sweden. A.P. Møllers Air Transport division is composed of Maersk Air, the leading privately owned airline in Denmark, operating both domestic and international passenger and cargo flights. Last, A.P. Møllers IT division is a leading provider of IT services to the Danish and other markets, including the United States, Japan, Sweden, India, and England. A.P. Møller, which is traded on the Copenhagen stock exchange, remains controlled by the founding Møller family, through Chairman Maersk Me Kinney Møller. Since the early 1990s, however, the companys day-to-day operations have been guided by CEO Jess Søderberg.

Founding a Global Shipping Giant at the End of the 19th Century

A.P. Møllers origins trace back to Denmarks shipping industry at the end of the 19th century. In 1886, Peter Maersk Møller was named captain of his first vessel, called the Laura, on the funnel of which was placed the emblem of a seven-pointed starwhich was later to become known throughout the world as part of the Maersk logo. In 1904 Møller and his son, Arnold Peter Møller, went into the shipping business on their own, founding a new company, Aktieselskabet Dampskibsselskabet Svendborg, or the Steamship Company of Svendborg, based in that Danish town. The Møllers bought their first ship, a used steamship with a deadweight capacity of 2,200 tons. This vessel was given the name Svendborg and it, too, sported a seven-pointed star, now painted against the blue background that was to remain an integral part of the Maersk logo.

By the end of their first decade in business, the Møllers had built up a fleet of six vessels and had founded a second company, Dampskibsselskabet af 1912, Aktieselskab (The Steamship Company of 1912), which was based in Copenhagen. This company and its ships also adopted the seven-pointed star for their funnels and flags. Over the following decade, the Møllers expanded their shipping business into new directions, adding brokering services in 1914and becoming one of the worlds leading ship brokers over the course of the centurythen founding their own shipyard, at Odensk, in 1917. The Odensk Steel Shipyard, with a capacity for building vessels up to 40,000 tons, quickly became an important asset for the company, which saw its fleet top 18 vessels and nearly 30,000 tons of deadweight capacity in 1918.

A.P. Møller formally adopted the Maersk name for its shipping operations in 1928, when it launched a new passenger and cargo liner service operating between the United States and Asia. The name Maersk had been Peter Møllers mothers maiden name, and itself was thought to stem from the Danish word marsk (marsh). Maersk now set sail to conquer the worlds oceans, establishing itself as a major shipping name. At this time, the company added its first tanker operations, with five tankers joining the companys 35-vessel fleet. At the beginning of the 1930s, Møllers total deadweight capacity had topped 160,000 tons. By the end of that decade, the companys fleet had swelled to 46 vessels.

The next generation of the Møller family joined the company in 1940 when Maersk McKinney Møller, the son of A.P. Møller, then aged 26, was named a company partner. Yet the younger Møllers career was nearly cut short before it even began. When the Nazis occupied Denmark in 1940, Maersk Møller left the country, traveling to the United States. A.P. Møller remained behind but refused to allow his company to serve the Nazi occupier and instead placed control of the companys operations under Maersk Møller in the United States. In that way, A.P. Møllers fleet was placed at the disposal of the Allied forces. By the wars end the Maersk fleet had lost more than half of its ships, with deadweight capacity dropping back to 120,000 tons.

With the rest of the European shipping and shipbuilding industries in disarray, A.P. Møller grew strongly in the postwar era. Maersk Møller, as well as the companys headquarters, returned to Denmark in 1947. Yet the companys wartime exile had left its mark, as the companys operations became more and more international in scope, starting with the establishment of a new ship brokering operation, Maersk Company, in the United Kingdom in 1951.

A.P. Møllers shipbuilding arm received a boost in the mid-1950s when it was awarded the contract to build a number of 50,000-ton tankers for the California Shipping Company. Yet the Odensk yard was too small to accommodate tankers of this size, and in 1957 the company started construction of a new yard, in Lindo, which, when it was completed in 1959, gave the company shipbuilding capacity up to 200,000 tons.

Diversifying in the 1960s

While shipping, grouped under the Aktieselskabet Dampskibsselskabet Svendborg and Dampskibsselskabet af 1912, Aktieselskab subsidiaries, remained the core of A.P. Møllers operation, in the 1960s the company began to diversify its holdings. One of the first of the companys expansion efforts came in 1961, when A.P. Møller acquired automotive parts supplier Roulunds Fabriker. That companys history dated back to 1736 and its founding as a ropewalkwhere ropes were made. In 1872, Roulunds began production of power transmission belts, an activity that led it to begin supplying components for the nascent automotive industry, including brake linings, added in 1926. In the 1930s, Roulunds production expanded to include conveyor belts, but by the time of its takeover by Møller, Roulunds had turned its specialty to the automotive market, particularly the original equipment market, winning such contracts as supplying disc brakes for the Volvo 140 in 1966 and fan belts for Fords European branch in 1967.

A still more significant development for A.P. Møller came in 1962 when the company was awarded the exclusive concession for the exploration and production of oil and gas in Denmark. The company founded a new subsidiary, Maersk Olie og Gas, which formed a joint venture with Texaco and Shell called the Dansk Undergrunds Consortium (DUC). By 1972 DUC had succeeded in starting up production, and production levels later topped 500,000 barrels per day, with gas production reaching one billion cubic meters per day. Olie og Gas also started up operations in Qatar and Algeria.

In 1964, A.P. Møller struck out into yet a new direction when it acquired supermarket group F. Sailing A/S. Founded in 1906 as Sailing Stormagasin, the division was renamed Dansk Supermarked and grew to become the second largest retail group in Denmark, before spreading out to include stores, under the Netto banner, in Germany, Poland, Sweden, and England.

Company Perspectives

Values and Philosophy: Shipowner A.P. Møllers old saying about Constant Care is still an important part of the values in the A.P. Møller Group. An example is the goal-oriented theoretical and practical training of new, young employees which ensures an efficient and resourceful team of personnel Each staff member, in his or her own individual fashion, is expected to contribute to the reinforcement of the A.P. Møller Groups worldwide position and the continuation and further development of the process which began in Svendborg in 1904.

In the further development of the A.P. Møller Group the keywords will continue to be: Quality, service and reliability.

The death of A.P. Møller in 1965 brought a close to more than 60 years in business, which had seen the company grow from a single vessel to a fleet of nearly 90 vessels and the creation of an internationally operating and diversified business. Maersk McKinney Møller took over control of the company that year and continued the diversification effort begun by his father. The younger Møller proved to have inherited his fathers business acumen, and over the next 30 years was responsible for transforming A.P. Møller into one of the worlds leading shipping companies.

The companys next diversification move came in 1968, when it acquired Phama-Plast. That company had been founded just four years earlier as one of the first in Denmark to produce singleuse and disposable medical products from plastic. That subsidiary was renamed Maersk Medical. Two years later, A.P. Møller took to the air with the founding of Maersk Air, which assumed the Odense-Funen and Odense-Copenhagen flight routes from Falk Air. Maersk Air began operations in 1970 with a fleet of three new Fokker F-27 Friendships; in 1973 it added to its fleet with five used Boeing 707720B aircraft. That same year saw the launch of the companys IT services division, which later became an internationally operating subsidiary under the name Maersk IT. The company extended its interest in plastics with the acquisition of Rosti A/S in 1971, which manufactured among other items bottles, themoplastic packing foam, and flowerpots.

The companys oil and gas activities had led it to diversify in other areas as well, such as the formation of Maersk Supply Service, in 1967, providing transportation and other support services for offshore operations. In 1972, the company added the operation of drilling rigs and related oil and gas production units to its list of activities. The beginning of gas production by DUC in 1972 also led the company to found a fleet of dedicated gas tankers, with the reception of the companys first gas tanker that same year. A year later, Maersk became an early entrant into a promising new shipping categorythat of the container ship. The companys first container ship was dubbed the Svendborg Maersk, a fitting start for what was shaping up as a revolution in international shipping. Indeed, the adoption of containers, which enabled ships to carry larger, yet segmented loads, enabled the shipping industry to counter the growing competition from the air freight industry.

The adoption of container ships on the one hand, and of the new supertankersvessels with dryweight capacity of more than 200,000 tons introduced at the end of the 1960son the other stretched the companys Lindo shipyard to its limit. In 1969 the company began construction of a new drydock capable of building ships with capacities ranging up to 650,000 tons, and by 1973 the company had completed construction of a 330,000-ton vessel. At the same time, the transition of the shipping industry to container ships created a demand for new services, such as the brokerage and consolidation of container cargoes. A.P. Møller entered this market at the end of the 1970s with the formation of the companys Mercantile office, which operated in Taiwan, Hong Kong, and Singapore. That business later became a full-fledged subsidiary, under the name of Maersk Logistics.

Shipping Leader in the 21st Century

A.P. Møller went public in 1982, listing its two operating companies, Aktieselskabet Dampskibsselskabet Svendborg and Dampskibsselskabet af 1912, Aktieselskab, on the Copenhagen stock exchange, while A.P. Møller itself remained a family-controlled partnership and in firm control of its diversified business empire. The company continued to grow strongly through the 1980s. In 1985, for example, A.P. Møller added to its shipping business with the acquisition of Norfolkline. Established in 1960, Norfolkline operated door-to-door logistics services, with an emphasis on frozen products, in Europe, and also operated ferry lines between the United Kingdom and the continent.

Key Dates

Peter Maersk Møller and Arnold Peter Møller buy a used steamship and found Aktieselskabet Dampskibsselskabet Svendborg (The Steamship Company of Svendborg).
The Møllers establish a second shipping company, Dampskibsselskabet af 1912, Aktieselskab (Shipping Company of 1912) based in Copenhagen.
The company establishes Odensk shipyards in order to build ships for its own and other fleets.
The company launches liner service between the United States and Asia and establishes the Maersk name for its shipping operations.
A new shipyard at Lindo is completed in order to construct larger vessels.
The company acquires Roulunds Fabriker, the first of a long series of acquisitions that diversifies A.P. Møller beyond shipping.
The company receives exclusive concession for the exploration and production of Denmarks oil and gas reserves and forms DUC partnership with Texaco and Shell.
The company extends Lindo shipyard with a new dry-dock capable of building vessels up to 650,000 tons.
The company founds Maersk Air and takes over Odense-Copenhagen and other flight routes.
DUC begins oil and gas production, and Møller launches its first gas carrier.
A.P. Møller goes public by listing its two shipping companies, Aktieselskabet Dampskibsselskabet Svendborg and Dampskibsselskabet af 1912, Aktieselskab, on the Copenhagen stock exchange.
The company acquires Norfolkline.
The first Panamax container ship is delivered.
Maersk Container Industri is launched to manufacture containers.
The company forms a global cooperation alliance with Sealand Containers.
The company acquires Sealand from CSX, forming Maersk Sealand, and Safmarine, based in South Africa.
The company announces its intention to sell off Roulunds and its medical products subsidiary, Maersk Medical; the company acquires West African liner business from Torm, of Denmark.

The rising importance of container transport led Møllers Odensk operation to begin construction of the new Panamax containersso-called because they reached the maximum width able to pass through the Panama Canalin 1988. The companys own use of containers led it to extend its industrial operations in 1991 with the formation of Maersk Container Industri, a manufacturer of containers for Maersk and other shippers.

Maersk McKinney Møller retired in 1993 to the position of chairman, tapping Jess Soderberg for the position of CEO. The company continued to develop its shipping wing throughout the world, including acquiring East Asiatic Co., a liner shipping specialist, and forming a vessel-sharing cooperation agreement with the United States Sealand, a subsidiary of CSX Corporation, in 1991. That agreement was extended into a global alliance in 1995. Then, in 1999, the partners announced that Maersk had acquired Sealand, creating a new world shipping leader, Maersk Sealand, with a fleet of more than 250 vessels. That same year, Maersk had already boosted its container shipping business with the acquisition of South Africas Safmarine Container Lines.

By then, Maersk had expanded its oil and gas operation as well, beginning oil production in Qatar in 1994. Maersks shipbuilding continued to make headlines, launching the worlds largest container ship in 1996then topping that vessel again the following year. The Odensk shipbuilding business expanded beyond Denmark at the end of the 1990s, acquiring the Baltija shipyard in Lithuania in 1997 and the Stralsund, Germany-based Volkswerft Stralsund yard in 1998. The Sealand acquisition also had boosted the companys logistics business, which was renamed Maersk Logistics in 2000, and which went on an acquisition drive at the beginning of the new century, acquiring ONeill & Whitaker of the United States, OFarrells International in Australia, DClick in France, and OY Arealog in Finland, all in 2001.

The downturn in the global shipping market in 2001, with a reduction in shipments coupled with an oversupply of containers contributing to slashing rates, brought A.P. Møller into difficulty by 2002. The company announced its intention to shed a number of its noncore operations, including its Roulunds automotive business and the Maersk Medical subsidiary. Meanwhile, the company continued to add to its shipping business, acquiring the West African liner business from fellow Danish shipper Torm in 2002. A.P. Møller also faced pressure from the stock marketin the wake of the Enron scandal, the company now faced pressure to adopt a greater transparency to its financial statements. Perhaps then A.P. Møller would reveal just how far it had sailed in its first 100 years.

Principal Subsidiaries

A.P. Møller Finance S.A. (Switzerland); A.P. Møller Singapore Pte. Ltd.; A/S Em. Z. Svitzer Group; A/S Roulunds Fabriker Group; Danbor Service A/S Group; Dansk Industri Syndikat A/S; Dansk Supermarked Group; Maersk Air A/S Group; Maersk A/S Group; Maersk Company Canada Ltd.; Maersk Company Limited; Maersk Data A/S Group; Maersk Gulf Ltd.; Maersk Hong Kong Ltd; Maersk Inc. Group; Maersk Medical A/S Group; Maersk Olie og Gas AS Group; Maersk Sealand; Maersk Singapore Pte. Ltd; Maersk South America Ltd.; Norfolkline B.V.; Odense Staalskibsvaerft A/S Group; Rosti A/S Group.

Principal Divisions

Shipping; Oil; Gas; Industrial; Retail; Air Transport; IT.

Principal Competitors

Sumitomo Corporation; TUI AG; FedEx Corporation; Canadian Pacific Ltd.; ThyssenKrupp Materials und Services AG; Tank- og Ruteskibe I/S; Nippon Express Company Ltd.; Exel plc; Danzas Group; Koninklijke Vopak NV; Kühne und Nagel AG und Co; SCHENKER AG; Kawasaki Kisen Kaisha Ltd.

Further Reading

A.P. Møller Buys Torm West Africa Service, Journal of Commerce Week, September 16, 2002, p. 10.

Cottrill, Ken, Business As Usual, Traffic World, August 2, 1999, p. 31.

Denmark Company: Maersk Sealand Expects Loss in 02, Journal of Commerce, August 29, 2002

Hahn-Pedersen, Morten, AP Møller and the Danish Oil, Copenhagen: JH Schultz Information.

Hornby, Ove, With Constant Care, Copehagen: JH Schultz Information.

Porter, Janet, Recovery Fails to Lift AP Møllers Forecast Loss, Australasian Business Intelligence, April 15, 2002.

Pressure on AP Møller to Be Open, Australasian Business Intelligence, April 23, 2002.

M. L. Cohen